Markets This Week » Weekly Market Commentary
Market Commentary - August 24, 2007
TSX climbs 4.7 per cent as global credit concerns ease
The world's major equity markets posted healthy gains this week as concerns over jittery credit markets eased.
Markets in Canada, the United States and Europe began rallying August 17 after the U.S. Federal Reserve (the “Fed”) slashed its discount rate, the rate at which it lends money to commercial banks, in an effort to put more cash in the hands of companies in need of short-term financing. The Fed also pledged to “act as needed” in order to contain credit market losses.
The Fed intervened again Tuesday as the Federal Reserve Bank of New York lowered the fee it charges bond dealers to borrow U.S. Treasury notes to a record low. The Fed also increased the size of its weekly auction of four-week Treasury bills.
This article of intrest was presented By Jocko Toic at the Investors Group. If you would like more one on one information, please feel free to contact him at:
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Email jocko.toic@investorsgroup.com
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Mortgage Mess Hits Stocks Again
Countrywide warns of worsening conditions. Central banks inject cash into the market to ease credit crunch. The SEC is checking the books of Wall Street banks for hidden subprime fallout.
Countrywide Financial (CFC, news, msgs), the biggest mortgage lender in the U.S., is the latest company to be slammed by the subprime mortgage market mess.
Shares of Countrywide fell $2.42, or 8.4%, to $26.24 in morning trading, after the mortgage lender warned late Thursday that problems in the credit and secondary mortgage markets will hurt the company in the short term.
"The secondary mortgage markets are also currently experiencing unprecedented disruptions resulting from reduced investor demand for mortgage loans and mortgage-backed securities and increased investor yield requirements for those loans and securities," Countrywide said in a regulatory filing with the Securities and Exchange Commission.
"These conditions may continue or worsen in the future," the filing continued. "In light of current conditions, we expect to retain a larger portion of mortgage loans and mortgage-backed securities than we would in other environments."
Stocks tanked yesterday, amid continued fears about the spillover of the subprime mortgage market and the tightening credit markets -- and today started off pretty ugly as well.
At 10:27 a.m. ET, the Dow Jones Industrial Average was down 139 points to 13,132, after plunging 387 points, or 2.8%, yesterday. This morning, the Nasdaq Composite Index had shed 38 points to 2,518, and the Standard & Poor's 500 Index had lost 16 points to 1,436.
Yesterday's plunge was the second-biggest one-day point loss this year; the worst drop of the year was on Feb. 27, when the Dow plummeted 416 points. Yesterday's point loss on the Dow was the 11th 100-plus point move in 15 trading sessions, illustrating how fears and jitters have caused extraordinary volatility in the markets.
Still, the Dow is up 6.5% year-to-date.
The Countrywide announcement could be the company's second blow to stocks in the last few weeks. On July 24, Countrywide CEO Angelo Mozilo sent the Dow plunging more than 200 points after he told investors that he didn't believe the housing market would turn around before 2009.
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| Mortgage Term | Our Rates | Standard Rates |
|---|---|---|
| Variable Rate | 5.35% | 7.00% |
| 6 Month Closed | 6.60% | 7.23% |
| 1 Year Closed | 5.90% | 7.00% |
| 2 Year Closed | 6.05% | 7.30% |
| 3 Year Closed | 5.90% | 7.35% |
| 4 Year Closed | 5.80% | 7.35% |
| 5 Year Closed | 5.74% | 7.29% |
| 7 Year Closed | 5.90% | 7.50% |
| 10 Year Closed | 6.05% | 7.85% |
| 15 Year Closed | 6.50% | 0.00% |
| 18 Year Closed | 6.50% | 0.00% |
| 25 Year Closed | 6.60% | 0.00% |
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